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What is the total amount of financing used to finance

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Reference no: EM132544499

The last balance sheet of Lotus company is as follows  Assets: 

Current Assets: 20 000 000                

Long-Term Assets: 80 000 000 

Total Assets:  100 000 000 

Liability  and  Equity 

Account Payables: 4 000 000 

Accrued Expenses: 1 000 000 

Short-Term Loan:  15 000 000 

Long Term Loan:    50 000 000 

Equity as Common Stock: 30 000 000 

Total Liab.  and Equity: 100 000 000 

This firm do not have any outstanding preferred stocks. 

  1. What is the total amount of financing used to finance the assets of this firm?
  2. What is the weight of debt and  the weight of equity (common stock) in financing the assets of that firm?
  3. Assume that this firm has only one short term loan whose annual interest rate is 10%  and  only one long-term loan whose annual interest rate is 12%.  What is the cost of debt for that firm if the corporate tax rate is 20%?
  4. This firm uses dividend discount method to find the cost of equity. What is the cost of equity if the expected dividend next year is $3  per share, if the current market value of Lotus shares is $30 per share and if firm expects an annual growth rate of 5% in future dividends?
  5. What is the WACC (weighted average cost of capital)  fort hat firm?

Note:  You may use two or three decimals (e.g.  25.15) in your answers

Reference no: EM132544499

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